Category: E-Tailing

Alibaba Group executive chairman Jack Ma wants to knock down barriers to global eCommerce by creating a business-driven, Internet-based platform that will function something like the World Trade Organization – but without all the controversy.

Speaking at the Boao Forum for Asia, the founder of the world’s largest eCommerce company called for the establishment of “a new platform on which we are not debating, not having disputes, we are sharing trade,” Ma said.

“On this platform we are promoting technologies as well as inclusive financing, so all [small businesses] and young people can enjoy the benefits of trade, so we are connecting the world with trade.”

Ma’s ultimate goal is the creation of a virtual, borderless economy not constrained by politics. He calls the vehicle for achieving this the World e-Trade Platform, or eWTP. As envisioned, the eWTP would be set up primarily to formulate international rules to eliminate barriers to eCommerce and help small businesses and consumers everywhere participate in cross-border trade. The online platform would be open to a wide range of stakeholders including SMEs and would not be dominated by governments and multinational corporations.

At the Boao forum – a business, government and academic leadership conference held annually on China’s Hainan Island – Ma said the WTO, which promotes free trade through lower tariffs and other trade barriers, “did a great job” in the last century in fostering a more global economy.

China in particular after its accession to the WTO in 2001 experienced tremendous economic growth, he noted.

But globalisation’s benefits have accrued unevenly and the WTO’s current rulemaking round, called the Doha Development Round, has been stalled for the last 15 years, largely over differences between developed and developing nations, Ma pointed out.

The eWTP’s purpose is to help “the 80 percent of companies and developing countries that cannot participate in world trade,” he said, adding, “It is not the purpose of the eWTP to destroy the WTO, but to try to destroy trade protectionism.”

Ma, who said last year he wants to help 10 million small businesses outside of China sell into global markets, stressed that he saw the proposed body as “complementary to the WTO … [so that] more nations that are poor like China was 15 years ago, let them enjoy the trade.”

“Let’s make trade simpler, let’s take out some of the rules and laws that are not working, to move trade faster,” Ma said. “Let businesses drive it with governments and NGOs and other organisations participating.”

During a Boao panel discussion focusing on Ma’s eWTO proposal, Indonesian trade minister Thomas Lembong and Luis Alberto Moreno, president of the Inter-American Development Bank, expressed support for the initiative.

The explosive worldwide growth of eCommerce is spawning new business models and has the potential to spark fundamental changes in the way international trade is conducted by eliminating costly layers of intermediaries and shortening global supply chains. At the same time, the borderless, relatively frictionless nature of Internet trade offers small-and medium-sized businesses everywhere unprecedented access to global markets.

“It’s hard to comprehend how fast things are changing, how fast things are moving,” Lembong said. “We really are talking about the dawn of a new era alongside the old one.”

The eWTP could speed these changes, Lembong said, calling it “an intriguing concept.”

“To me, eCommerce is an oasis of freedom in a world that threatens to be over-regulated and politicized” by protectionist trade barriers, he said, comparing the current trade regime to “a traffic jam.”

Ecommerce “is an antidote to the poison of protectionism,” Lembong said. “Technology is a great equaliser, the best tools are available to the smallest companies. Now, thanks to technology and the mobile Internet, anybody with a mobile phone can become an entrepreneur.”

Moreno noted that international eCommerce faces a number of challenges. Products can’t be consistently delivered quickly across borders because of inefficiencies in international logistics and customs procedures.

“For a product to enter a country there might be 10 agencies you have to deal with,” Moreno said.

Boao panelist Kasper Jakobsen, CEO of US-based infant formula maker Mead Johnson, agreed that global import regulations needed greater uniformity.

“The biggest barrier to expanding [trade] platforms across boundaries is so many products have to comply with different regulations in all the markets they are sold in,” Jakobsen said.

A clue to what reduced barriers with eWTP might look like can be seen in China’s efforts to boost cross-border eCommerce by setting up free-trade zones and bonded warehouses where certain goods ordered by Chinese consumers from overseas companies are subject to lower tariffs and receive expedited customs processing.

“We have to ramp up and get ready for that platform Jack is inviting us to join,” Moreno said.

Panelists also agreed backing should be sought for the eWTP proposal from world leaders at the upcoming G20 summit, scheduled to be held in September in Hangzhou, China, where Ma’s Alibaba Group is headquartered.